Court Addresses Venue Selection In Wrongful Termination Suit

An employee who decides to sue a former employer for unlawful termination must not only determine what potential claims he or she may have against the employer, but where does her or she file suit? That determination is not always as simple as it sounds. There are jurisdictional restrictions governing whether the lawsuit can be filed in State or Federal Court, in which state, which type of court, and finally, in what local vicinage. So even if an employee has determined that it is proper to file the case in the Law Division of the New Jersey Superior Court, there is still the question of in which county to file, i.e. the proper “venue.”

Where an employee works for a corporation, New Jersey Court Rules permit the employer to be sued “in the county in which its registered office is located or in any county in which it is actually doing business” R. 4:3-2(b). However, neither the court rules, nor any New Jersey cases, clearly address: (1) whether a Limited Liability Company (“LLC”), as opposed to a corporation, can be sued where it has a registered office or in any county in which it is actually doing business; and (2) just what exactly constitutes “actually doing business” in a particular county.

In a recent case filed in the Essex County Superior Court, Vincent Crepy v. Reckitt Benckiser, LLC, 2016 N.J. Super. Unpub. LEXIS 414 (Law Div. Feb. 19, 2016), the Court endeavored to address this problem by defining certain parameters on venue selection. The Plaintiff in Crepy filed a complaint in Essex County against his former employer, an LLC, for alleged wrongful termination of his employment. The employer was a Delaware Limited Liability Company registered in Mercer County, New Jersey, with its principal place of business in Morris County, New Jersey, and no registered locations in Essex County. It was also uncontested that all events leading up to the employee’s termination occurred outside of Essex County. However, the employee argued that the case was properly brought in Essex County based upon his employer “actually doing business” in Essex County. The employer disagreed with this contention and moved to change the venue to Morris County. The employer relied upon its having a principal place of business in Morris County, that the employee was employed at the employer’s Morris County Office, and that the employee and the employer entered into a Letter of Intent regarding his employment with an affiliate while he was working in Morris County.

The Court first addressed whether an LLC should be treated like a corporation to determine where it resides for venue purposes. While R. 4:3-2(b) clearly states that a corporation doing business in a county is subject to venue in that county, the Rule does not mention an LLC or other form of unincorporated business entity. Nonetheless, the Court ruled that despite no clear directive by the New Jersey Supreme Court, it should be presumed that R. 4:3-2(b) was not intended to exclude other forms of business entities, such as LLCs. In reaching this conclusion, the Court relied upon a 1967 Supreme Court case in which the Supreme Court extended the “doing business requirement” of a similar federal venue rule to an unincorporated labor union. Denver & R. G. W. R. Co. v. Bhd. of R.R. Trainmen, 387 U.S. 556 (1967). The Crepy Court found that, similar to the labor union situation, a LLC can be sued wherever it actually does business.

The Crepy Court next reached the issue of how to assess whether a corporation or LLC is “actually doing business” in a particular county for venue purposes. Since there was no New Jersey precedent, the Court found persuasive case law from other jurisdictions in which this issue was squarely addressed. For example, in Bucklew v. G.D. Searle & Co., 138 Ill. 2d 282 (1990), the Illinois Supreme Court analyzed whether the defendant company was “actually doing business” in Cook County, under the Illinois venue statute, which is identical to New Jersey’s venue statute. The Crepy Court adopted the Illinois Supreme Court’s conclusion that the “doing business” requirement for venue purposes requires more than the minimum contacts with a forum required to obtain personal jurisdiction. The Court reasoned that both the New Jersey and Illinois Legislatures revealed their intent to expand personal jurisdiction to the extent permitted by the Constitution through similarly expansive long-arm statutes. The same is not true, however, for venue selection. Rather, the venue rules require more extensive contacts with the venue forum because the underlying purpose of the venue statute is the convenience of litigants and witnesses.

The Court noted that case law from other jurisdictions considering this issue has measured this requirement in a relative, rather than an absolute manner. Thus, a company’s business in the county of venue must be substantial relative to the total amount of business it does. The Crepy Court performed this analysis and found that the business performed in Essex County was incidental and, thus, granted the employer’s motion to transfer venue to Morris County.

By Francine Foner, Esq. and Ty Hyderally, Esq.

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